Mad dash for property tax deductions as 2017 ends

By Chris Lisinski, clisinski@lowellsun.com

Posted:
01/02/2018 11:44:28 AM EST

Residents across the region surged to town and city halls last week to pay their property taxes early with hopes that doing so will save them money before the new federal tax code drafted by Congressional Republicans goes into effect next week.

In the days since the bill was signed into law by President Donald Trump, municipal tax collectors have seen an influx of residents hoping to pay ahead on their property taxes before 2017 ends. According to the IRS, paying in advance may allow property owners to deduct those taxes on their next returns despite the new bill capping those deductions at $10,000 annually.

With only a few business days until the end of the year, the trend has at times turned into a mad dash.

"It's been insane," said Vyctoria Pantano, payroll coordinator and assistant to the tax collector in Groton. "It's been nonstop. The phones are off the hook. There's been lines at the window, people trying to prepay. It's definitely high volume."

As of Thursday morning, Pantano said, Groton had received $367,000 in prepaid taxes from about 70 property owners, significantly more than the same time last year.

And Groton is not alone: while exact figures were not always available, tax collectors across Greater Lowell and North Central Mass. have seen similar crowds in the past week. Most reported dozens of residents prepaying taxes. One municipal employee sighed audibly when a reporter inquired about the topic.

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In Littleton and Westford, town employees estimated several hundred people had paid ahead.

Linda Rossi, assistant tax collector in Leominster, said the city only saw five or six residents pre-pay taxes last winter. But in recent days, close to 50 have done so, most motivated by news reports about the tax bill.

"People have read the paper and watched the news, and when they come in to pay them, that's what they're telling us," Rossi said.

A controversial provision in the tax bill, which takes effect in 2018, limits the amount of state and local tax filers can deduct from their federal taxes to $10,000. As a result, residents of states with high local rates may not be able to deduct as much as previous years.

Massachusetts is one of several states where the state and local tax deduction is claimed at an above-average rate. In 2015, about 37 percent of Bay State taxpayers took the deduction, compared to a national average of about 30 percent, according to statistics from the Tax Policy Center.

In some portions of the country, public officials are encouraging residents to pay ahead on their property taxes with hopes of reaping benefit from the local tax deduction before the new cap goes into effect.

It had been unclear for several days whether the strategy would work. The IRS announced Wednesday that taxes paid ahead by the end of 2017 could be deducted on returns, but only if the taxes were already assessed by the year's end.

Towns around Lowell and Fitchburg were allowing residents to pay the next two quarters of property taxes. Those bills are normally due in February and May.

Groton's town hall was not full of long lines on Thursday afternoon, but there was a steady stream of property owners walking up to the tax collector's window with checks in hand. Dorothy Christiansen, a resident, said her accountant reached out to her to suggest she pay ahead.

"I can deduct it on my 2017 return, but I won't be able to deduct it in 2018," said resident Dorothy Christiansen. "It saves me a little money."

Christiansen would not say exactly how much she hoped to save by paying ahead. But on a day when temperatures hovered in the single digits, that amount could not have been insignificant.

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